Mobile Deposit is Hot

A new Javelin Strategy & Research report issued yesterday —“2011 Mobile Remote Deposit Capture” reveals one in every four consumers and one in every two mobile bankers want mobile remote deposit capture (RDC) to bypass ATMs and bank branches and deposit checks using cell phones. However, only three of the top 10 largest U.S. financial institutions— JPMorgan Chase, PNC, and U.S. Bank — currently offer this service, highlighting a huge market gap for mobile RDC. Data from the report also shows that over half of financial institutions (FIs) will roll out mobile RDC in the next 12 months.

“Mobile RDC is the latest gold rush opportunity for first-mover FIs to grab market share,” said Mark Schwanhausser, Javelin. “FIs can use mobile RDC to lure consumers away from competitors. Similarly, FIs can use mobile RDC as a customer retention and growth strategy.”

“Mobile RDC offers revenue and cost-cutting opportunities,” said Javelin’s Mary Monahan. “FIs are able to lower check processing costs by directing consumers away from bank branches and ATMs. FIs can position mobile RDC as a premium service that provides value to customers and charge customers fees for making mobile deposits. It’s a win all around for consumers and FIs.”

In a March representative survey of 5,102 consumers from the U.S who use a mobile phone and who manage household finances, 24% rated mobile deposit as “desirable” or “very desirable.” “When you see 24% of consumers say they like a product, that’s unusual,” says Monahan. “Typically you’ll only see 10%. That’s a hot product and you should jump on it.”

The case for mobile capture as a customer-acquisition strategy is no slam-dunk, however. Some 47% of consumers with a mobile phone still view mobile capture as not desirable and another 27% view it only as “somewhat desirable.” And many banks and credit unions that don’t yet offer the service have concerns about fraud. Javelin interviewed 25 executives from 22 financial institutions for the report. There was widespread agreement among the 79% of executives whose institutions did not offer mobile capture “that the technology would provide value to their customers,” the report says. But almost one-third of the executives claimed that fraud was their biggest concern. Specific worries included forgery, cited by all of the executives, duplicate deposits, cited by 83%, and check manipulation, also 83%.

Javelin, however, says remote capture fraud is more “myth than reality.” The fraud that has occurred has been more accidental than intentional, and the intentional fraud patterns were analogous to traditional check fraud already monitored by back-end screening systems, the report says.

Fearful or not, the majority of financial-institution executives surveyed appear ready to roll out mobile capture. Some 11% said in April that they would offer the service within the next three months and another 11% said they’d start in three to six months. Some 37% planned to offer the service in seven to 12 months. Many plan to offer mobile capture through third-party processors such as Fiserv Inc., Fidelity National Information Services Inc. (FIS), or others.